28 million spare bedrooms: Here’s what it tells us about Aussie households

Australia’s housing affordability is worsening across the country, but there could be an answer: spare bedrooms.

According to the 2021 Census, more than 70% of Australian households have at least one spare bedroom and more than one in 10 households have three or more spare bedrooms.

That represents at least 3.5 million spare bedrooms across the country held by just those one-in-ten households alone, as reported by realestate.com.au and PropTrack analysis.

This translates to more than 28 million bedrooms, which is around one bedroom per person.

And that 28 million doesn’t even account for bedrooms in unoccupied dwellings.

The Census data also shows that around 7% of households have fewer bedrooms than they have beds, which is likely due to young kids sharing a bedroom rather than an issue with overcrowding.

The households most likely to have spare rooms

The data shows that these spare bedrooms are mostly located in older households, households without children, single households, lower-income households, and households owned outright.

Here’s a deeper delve into the data.

Households that consist of couples without children and lone-person households are most likely to have two or more spare bedrooms.

This includes both households that have never had children and those with older children who have moved out.

In contrast, very few group households have two or more spare bedrooms, which is unsurprising as most of these would be rental properties and share houses which are rented out by the room.

Many of the households with two-plus spare bedrooms are probably older “empty nest” households, although the Census data doesn’t include estimates of household age.

However, the data does suggest that households without kids are most likely to be older households, with more than 60% of both lone households and couples without children being 55 or older.

Households that own their home outright are also much more likely to have two or more spare bedrooms.

And while not all older households own their home outright, given it takes time to pay off a home loan, most will be older.

At the same time, it's unsurprising that (in comparison) renter households are less likely to have spare bedrooms for the same reason mentioned above, but what is interesting is that more than half of renter households have at least one spare bedroom.

And it’s not just household composition that helps to dictate which households have spare bedrooms, income levels also play their part.

Census data shows that having two or more spare bedrooms is more common for lower-income households, which is consistent with those households being retired or partly retired.

The data has changed in the past 5 years: Here’s why

Between the 2016 and 2021 Censuses, the share of households with two or more spare bedrooms increased from 38.8% to 40.4%.

While that might not sound like a big change, that represents more than 200,000 households or at least 400,000 newly spare bedrooms, PropTrack notes.

Interestingly, this trend is spread country-wide.

How and why?

Houses haven’t gotten bigger, so it’s more likely a reflection that households have become smaller.

The 2021 Census shows there are many more one-person households and fewer three-plus-person households compared to five years ago.

Here’s what we can do

With Australia’s rental crisis worsening, and the property market cooling from its peak, it poses the question: how can we use these spare bedrooms more efficiently?

Sure some of the bedrooms are free and available by choice.

But at the same time, many spare rooms are in empty-nester households that would probably benefit from downsizing.

And the bonus, that would free up housing stock for first-home buyers and young families.

PropTrack suggests that reforming stamp duty to make downsizing more attractive would help younger households and improve housing affordability by freeing up some of these homes with plentiful spare bedrooms for larger – and younger – households that need that space.

And we’ve already seen some work in this space.

In mid-September, Labor introduced a Bill to parliament that would give aged pension recipients more time before the proceeds from the sale of their homes affect their pension payments.

The Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022 would give pensioners an additional 12-month asset test exemption on their home sale proceeds.

Labor says the exemption is designed to give people more time to purchase, build, rebuild, repair, or renovate a new principal home before their pension is affected.

The incentive is in addition to the downsizer superannuation benefit which allows older people to put up to $300,000 into their super using the money from the sale of their main residence, regardless of caps and restrictions that otherwise apply.

A final note

While this analysis of the Census data into spare rooms is an interesting read, the fact is, without encouragement for investors to buy investment properties, Australia’s rental crisis could well continue.

What is most important for property investors to note at this time is that ‘time in the market’ is certainly more important than ‘timing the market’.

The market might not seem prosperous right now, but the right investment property in the right area will garner the best results.

As well as a great property investment strategy.

After all, the best property investment strategy depends on your situation, finances, and your goal.

There is a “no one size fits all” strategy when it comes to property investment and what strategies to use.

The key to picking the right property investment strategy for you is making sure it lines up with your current financial needs as well as your future financial goals.

It’s vital then that once you choose your strategy, you only look at investment properties that fit into your long-term strategy rather than getting distracted by the many perceived opportunities in the market.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.